Germany

German Chancellor Angela Merkel and Foreign Minister Frank-Walter Steinmeier, her challenger in Sept. 27 elections, failed to resolve a coalition dispute over nationalization of Hypo Real Estate Holding AG, Bloomberg reported. Talks at the chancellery in Berlin Wednesday broke up with Merkel’s Christian Democratic Union and Steinmeier’s Social Democratic Party unable to bridge a divide over how to save Hypo Real, the Munich-based property lender that’s already received €92 billion ($120 billion) in public funds. Merkel’s dilemma over nationalization of banks is echoed internationally. U.K.

The European Central Bank is drawing up guidelines for European governments that are considering "bad banks" to house lenders' toxic assets, while Germany is moving closer to agreeing to legislation that would help its banks set up individual bad banks, The Wall Street Journal reported. The parties in German Chancellor Angela Merkel's coalition have expressed support in recent days for a plan under which Germany's banks would move bad assets off their books.

Germany's Finance Ministry is weighing the nationalization of Hypo Real Estate Holding AG, the Munich bank whose troubles prompted Germany to bail out its entire banking sector last year, The Wall Street Journal reported. No decision has been made, according to a senior German official. But Finance Minister Peer Steinbrück is considering ways to take control of Hypo as a prelude to radically scaling down its operations, this person said. The government could even confiscate shareholders' stakes in the bank, under one option being considered.

An unplanned bankruptcy has disrupted a plan by Flying J to open a chain of travel plazas across Europe that would be modeled after its outlets in the U.S. and Canada, The Salt Lake Tribune reported. The Ogden, Utah-based company had been mapping out its first expansion outside North America when a steep drop in oil prices and a lack of available financing suddenly brought on a liquidity crisis that forced it into bankruptcy last month.

As part of her efforts to combat the economic crisis, German Chancellor Angela Merkel is increasing the state's influence in the market, buying holdings in banks and bailing out individual industries and companies, Spiegel Online reported. Is Germany turning into a planned economy? Read more.

Talks between stricken Hypo Real Estate and the German bank aid fund heated up on Friday with sources saying a rescue would inject more than €10 billion ($13.3 billion) of fresh capital. Earlier in the week, sources close to the talks told Reuters that the German government is set to take a stake in Hypo, a move that would mark the second part-nationalisation of a German bank this year.

Russia's gas price dispute with Ukraine escalated Tuesday, disrupting deliveries to the European Union in the midst of a bitter cold spell, with a number of countries reporting that gas supplies had been suspended or reduced, and Germany predicting a possible shortage, the International Herald Tribune reported. Bulgaria, Romania, Croatia, Macedonia, Turkey, Greece, the Czech Republic and Austria reported that gas supplies had been suspended or reduced after Gazprom, the Russian gas monopoly, reduced gas shipments through Ukraine.

Austrian automotive warp and weft knit fabric producer Eybl International AG announced that it was filing for administrative receivership after recent talks about a takeover by the Slovenian Prevent Group failed to lead to a positive conclusion, the trade journal Knitting Industry reported. Eybl International, which specialises in textile production, fabrication and components for automotive interiors, operates eight production sites in Austria, Hungary, Romania, Germany and Slovakia as well as four distribution sites in Germany, France, Spain and Britain.

A German bank has struck a deal with bankrupt Lehman Brothers Holdings Inc. regarding the exercise and liquidation of currency options contracts nominally worth €139 million, Bankruptcy Law360 reported. According to Judge James M. Peck's order Monday in the the U.S. Bankruptcy Court for the Southern District of New York, if Deutsche Zentral-Genossenschaftsbank AG exercises a currency option, the transaction will be deemed liquidated at the current market value.

German brake pads maker TMD Friction, which has filed for insolvency for four German plants, has attracted the interest of possible buyers, a spokesman for the company's insolvency administrator said. Among the possible buyers are both industry-related companies and financial investors, Reuters reported. A spokesman said the company aims to keep the group intact in a possible sale. The Leverkusen-based group employs around 4,500 staff in 11 countries and generated 2007 sales of 690 million euros ($892.4 million). It has 2,000 staff in Germany alone.